Consumer confidence improved slightly this month, buoyed by an equity rally, but employment sentiment dipped below the neutral mark for the first time in more than six years as job hunting turned difficult with the entry of new graduates, a National Central University (NCU) survey showed yesterday.
The consumer confidence index came in at 78.19 this month, a mild gain of 0.43 points from last month on the back of an improving investment sentiment, as the TAIEX rallied above the 10,500-point mark several times this month, the survey showed.
Despite the equity rally, all six sub-indices slipped below the neutral 100 level, reflecting a general lack of confidence that bodes ill for consumer spending and overall domestic demand, National Central University Research Center for Taiwan Economic Development director Dachrahn Wu (吳大任) said.
A score above 100 suggests optimism and values below the threshold indicate pessimism.
In particular, the employment outlook shed 0.45 points to 99.95, retreating into pessimistic territory for the first time since April 2011, the survey showed.
“The unemployment rate might climb higher this month and through the summer after rising to 3.74 percent last month as new graduates entered the job market and many have yet to land positions,” Wu said by telephone.
Seasonality aside, the new labor rules has deepened worries about the employment outlook at small firms in the service sector, Wu said, adding that the gauge has steadily declined since January.
The situation might continue to deteriorate unless authorities revise labor regulations, and allow employers and employees more flexibility in setting overtime pay and work hours, Wu said.
The stock investment index picked up 2.3 points to 90.3, consistent with a 1.09 percent increase, or 113.3 points, in the TAIEX, the survey showed.
The uptick in investment sentiment was the sole factor that held up the consumer confidence gauge, which would have weakened otherwise, Wu said.
The sub-index on durable goods purchases lost 0.2 points to 84.65 this month, while confidence in the economic outlook softened by 0.05 points to 71.55, the survey showed.
The findings contradict a widely expected acceleration in economic recovery for the second half of the year, Wu said, adding that a series of pension and tax reforms accounted for a general lack of confidence.
The inflation sub-index inched up 0.35 points to 45.8, indicating a slight increase in consumer price expectations, Wu said.
The household income reading rose 0.65 points to 76.9, which could be attributed to the wealth effect related to the stock rally, but the effect is not evident, he said.
The survey polled 2,554 people aged 20 and above by telephone between Wednesday last week and Sunday, with a margin of error of 2 percentage points.
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